Article

• Publication year: 2022

Article Vol. 35 No. 3 Pg. 30 Utah Bar Journal June, 2022

May, 2022

Assessing the Statute of Limitations in a Nonjudicial Foreclosure Context

By Spencer Macdonald

In April 2018, the Utah Court of Appeals issued a decision in Deleeuw v. Nationstar Mortgage LLC, 2018 UT App 59, 424 P.3d 1075. More recently, in October 2021, the same court issued a decision in Daniels v. Deutsche Bank National Trust, 2021 UT App 105, 500 P.3d 891. Both cases addressed the application of the statute of limitations in the context of nonjudicially foreclosing on a trust deed. However, the two cases reflect fairly divergent approaches to limitations analysis, namely, whether the event commencing the limitations period is the date of the last payment made (as found in Daniels) or the last payment owed (as found in Deleeuw). As these respective triggering events could, in practice, be many years apart, the divergent approaches in Deleeuw and Daniels may create some uncertainty as to how litigants should approach the limitations issue in a foreclosure setting.

Nonjudicial foreclosures in Utah are governed by Title 57 Chapter 1, of the Utah Code. Interestingly, however, this chapter does not specify a statute of limitations. Instead, Utah Code Section 57-1-34 (Sale of trust property by trustee – Foreclosure of trust deed – Limitation of actions) provides that:

[a] person shall, within the period prescribed by law for the commencement of an action on an obligation secured by a trust deed:

(1) commence an action to foreclose the trust deed; or

(2) file for record a notice of default under Section 57-1-24.

The above-referenced “period prescribed by law” is not stated in the statute, but was later identified in 2018 in Deleeuw:

The parties disagree on which “period prescribed by law” applies in this situation. Deleeuw asserts that the statute of limitations applicable here is Utah Code section 78B-2-309, the six-year statute of limitations for an action on an instrument in writing, and that the limitations period began to run on September 1, 2008 – the date that he first failed to make a monthly mortgage payment. See id. § 78B-2-309 (2012). Nationstar, however, asserts that the applicable statute of limitations is found in Utah Code section 70A-3-118(1), the six-year statute of limitations for negotiable instruments under the UCC, which began to run on February 5, 2016, the date Nationstar accelerated the payments under the Note. See id. § 70A-3-104(1) (2009) (negotiable instrument); id. § 70A-3-118(1) (statute of limitations).

2018 UT App 59, ¶ 11. Thus, the limitations period turns on the application of one of the two foregoing statutes: Utah Code Ann. § 78B-2-309 (“Within six years – Mesne profits of real property – Instrument in writing – Fire suppression”) or Utah Code Ann. § 70A-3-118(1) (“Statute of...